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Have you invested in a 419 pension plan?

If so, get to know the real truth behind your investment and what you can do to defend yourself. Since 2004, the IRS has amended the tax laws regarding these plans and thus has placed aggressive penalties and fines and aggressively auditing people who don’t know the truth. Consult with us today and let us help guide you through this serious situation and lower your financial risk.

We can help you deal with:

Those employers who have had the misfortune of receiving an audit notice from the IRS

... regarding their Section 419 plan should seek the immediate assistance of a knowledgeable tax professional. Otherwise they will likely face stiff “listed transaction” penalties in addition to the additional tax, interest and customary negligence and failure to pay penalties.

Listed transactions

... refer to transactions that the IRS considers “abusive” or “tax shelters” transactions. Under applicable Treasury Regulations, taxpayers who enter into such transactions are required to notify the IRS yearly by filing Form 8886 with their annual tax return. Those who don't file Form 8886 for a particular year are liable for a penalty under Section 6707A of the Code equal to the lesser of $200,000 or 75 percent of the amount of the decrease in tax occasioned by the listed transaction; this comes with a minimum penalty of $10,000.

It is important to negotiate with the IRS

...to ensure that the taxpayer will be able to claim any additional income, included as a result of the dis-allowance, to the taxpayer’s tax basis upon distribution of the insurance policy from the plan. Taxpayers who fail to do so face the possibility of double taxation on the benefits.

All taxpayers, whether under audit or not,

should take immediate steps to disentangle themselves from the Section 419 arrangement. Most plans will return benefits and/or policies to participating employers or eligible employees upon the employer’s withdrawal from participation.

419 Plan

... any funded arrangement
used to provide welfare
benefits.

419(e) Plan

... a funded welfare benefit arrangement intended to qualify as a welfare benefit fund under § 419(e) which can deduct “qualified costs” under § 419(c).

Welfare Benefit

... any employee benefit which is not considered a pension benefit or deferred compensation; i.e. bona fide vacation leave, sick leave, compensatory time, severance pay, disability pay, or death benefits.

Funded

... a benefit is funded when the employer sets aside assets in a trust, escrow, or similar arrangement, where (i) the assets can only be used for the benefit of employees or
beneficiaries, (ii) the assets cannot be returned to the
employer, and (iii) the assets are beyond the reach of the employer’s creditors.